SRINAGAR: The Jammu Kashmir and Ladakh High Court has quashed proceedings imposing a penalty on a petitioner after holding that a one-day delay in issuing a statutory notice under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017, violated the mandatory timeline prescribed by law.
A Division Bench comprising Acting Chief Justice Sanjeev Kumar and Justice Mohd Yousuf Wani passed the order on September 7 while allowing a writ petition filed by Danish Hassan through advocate Zaffer Qadri.
The court set aside the October 28, 2024 order passed by the Appellate Authority, Appeals-I, State Taxes Department, Kashmir, as well as the September 17, 2024 order of the Deputy Commissioner, State Taxes Enforcement (Central), Kashmir, holding that both had been issued in violation of the mandatory provisions of Section 129(3) of the CGST Act.
The petition challenged the appellate order passed in an appeal titled “M/s Stage Trading Pvt. Ltd. Srinagar Vs. UT of J&K & Ors.”, which had upheld the order of the Deputy Commissioner passed under Section 129(3) of the Act.
The petitioner’s case was that the Proper Officer had failed to serve the required notice within seven days from the detention or seizure of the goods or conveyance. It was argued that such non-compliance rendered the subsequent proceedings legally unsustainable.
Appearing for the petitioner, advocate Zaffer Qadri relied upon an earlier judgment of the same court dated July 23, 2026, in “Mohd. Hazzak Lohar & Anr. Vs. Commissioner State Taxes and Anr.”, wherein the court had held the provisions of Section 129(3) of the CGST Act to be mandatory.
The respondents were represented by Senior Additional Advocate General Mohsin Qadri, assisted by Additional Counsel Maha Majeed.
Considering the matter, the Bench referred to its earlier ruling and reiterated that the timelines prescribed under Section 129(3) are mandatory.
“We are, thus, inclined to concur with a view taken by various High Courts and the High Court of Gujarat that the timelines under Section 129 of the Act are mandatory,” the court said, as reproduced in the order.
The court noted that the provision regulates the exercise of coercive statutory powers, protects valuable rights and uses the expression “shall” while prescribing the statutory timelines.
It further observed that treating the timeline as directory would defeat the legislative purpose of preventing prolonged detention and seizure of goods, conveyances or documents belonging to the transporter or assessee.
“Whenever the statute authorizes coercive action, like seizure or detention, the Courts insist on strict compliance with the statutory procedure,” the Bench observed.
The court also held that the determination of whether a statutory provision is mandatory depends upon legislative intent, context, object and the consequences of non-compliance.
“From the perusal of the provision in question in the context of the scheme of the Act of 2017, it is axiomatic that the timelines have been introduced to prevent arbitrary detention, prolonged seizure and harassment to the trader,” the court said.
Applying the earlier ruling to the case, the Bench noted that the Proper Officer had detained the goods along with the conveyance on September 2, 2024, and was therefore required to issue a show-cause notice within seven days of the detention and seizure.
The notice intimating the detention and seizure and specifying the penalty payable was issued on September 11, 2024, and uploaded on September 12, 2024.
The court further noted that the Proper Officer was required to pass an order for payment of penalty within seven days from the date of service of the notice.
Finding that the notice had been issued beyond the prescribed period, the Bench held that the statutory mandate had been violated.
“The mandate of Sub Section 3 of Section 129 of the Act was violated by the Proper Officer. There was a delay of one day in issuing the notice, which vitiates the entire proceedings,” the court held.
Consequently, the High Court allowed the writ petition and quashed the appellate order dated October 28, 2024, and the Proper Officer’s order dated September 17, 2024.
The court, however, clarified that quashing the notice and orders would not prevent the authorities from pursuing any proceedings that may otherwise be permissible under the CGST Act.
The Bench also directed that the penalty amount deposited before the court pursuant to its December 17, 2024 order be released in favour of the petitioner after due verification.
The petition was accordingly disposed of.
